Wood-pellet stoves envisioned as good for poor, profitable
Eric Reynolds will tell you he is on the verge of freeing much of humanity from the deadly scourge of the cooking fire. He can halt the toxic smoke wafting through African homes, protect what is left of the continent’s forest cover and help rescue the planet from the wrath of climate change.
He is happy to explain, at considerable length, how he will systematically achieve all this while constructing a business that can amass billions of dollars in profit from an unlikely group of customers: the poorest people on Earth.
He will confess that some people doubt his hold on reality.
“A lot of people think it’s too good to be true,” said Reynolds, a California-born entrepreneur living in Rwanda. “Most people think I am pretty out there.”
The company he is building across Rwanda, Inyenyeri, aims to replace Africa’s overwhelming dependence on charcoal and firewood with clean-burning stoves powered by wood pellets. The business has just a tad more than 5,000 customers and needs perhaps 100,000 to break even. Even its chief operating officer, Claude Mansell, a veteran of global consulting company Capgemini, wonders how the story will end.
“Do we know that it’s going to work?” he asked. “I don’t know. It’s never been done before.”
Inyenyeri presents a real-world test of an idea gaining traction among those focused on economic development: that profit-making businesses may be best positioned to deliver critically needed services to the world’s poorest communities.
Governments in impoverished countries lack the finances to attack threats to public health, and many are riddled with corruption (although, by reputation, not Rwanda’s). Philanthropists and international aid organizations play key roles in areas such as immunizing children. But turning plans for basic services into mass-market realities may require the potent incentives of capitalism. It is a notion that has provoked the creation of many businesses, most of them failures.
“Profit feeds impact at scale,” said Reynolds, who has raised roughly $12 million in investments for his business. “Unless somebody gets rich, it can’t grow.”
More than four decades have passed since Reynolds embarked on what he portrays as an accidental life as an entrepreneur, an outgrowth of his fascination with mountaineering. He dropped out of college to start Marmot, the outdoor gear company named for the burrowing rodent. There, he profited by protecting Volvo-driving, chardonnay-sipping weekend warriors against the menacing elements of Aspen. Now he is trying to build a business centered on customers for whom turning on a light switch is a radical act of upward mobility.
Inyenyeri is betting that it can give away stoves and make money by charging people for fuel. It vows to deliver virtues that go well beyond the bottom line.
The forests would be spared, because making wood pellets requires far fewer trees than wood fires and charcoal. Customers would gain a reprieve from ailments related to smoke from cooking, including cataracts, heart disease and respiratory ailments that in many countries kill more people than malaria, HIV and tuberculosis combined.
Rwandans in rural areas — and, eventually, across Africa and South Asia — would be freed from the time-sucking drudgery of having to look for wood. People in cities, who rely on charcoal, could switch to cheaper wood pellets, using the savings to buy health care, food and school uniforms.
In much of the developing world, initiatives aimed at sparing the environment tend to pit the livelihoods of poor people against the protection of natural resources. Peasants in the Amazon are supposed to stop hacking away at forests to clear land for crops so the rest of the planet can benefit from a reduction in carbon emissions. Yet in Inyenyeri’s designs, the everyday concerns of poor households are aligned with environmental imperatives because people prefer to cook with the stoves.
On a recent evening, he visited Buzuta village, a scattering of mudwall huts on a rutted dirt road in western Rwanda. He sat opposite Mukamurenzi Anasthasie, who is rearing two grandchildren and two orphans in a house with neither plumbing nor electricity.
For most of her 60 years, Anasthasie watched the daylight seep away with a sense of dread, anxious that darkness might fall before she could find enough wood to cook a meal. The forests that once surrounded her village had been dismantled and hacked into firewood. She and her neighbors wandered for hours into the surrounding mountains looking for sticks.
“Sometimes, we’d just collect dry grasses and try to cook with those,” she said.
Two years ago, Anasthasie traded her cooking fire for an Inyenyeri stove, a red cylinder holding a chamber to burn pellets that sits on her dirt floor. She no longer spends her day worrying about wood. She and the children have been relieved of their constant coughing. She can put beans on to simmer and walk away and do something else.
“I don’t have to waste time waiting for food,” she said.
Rwanda came into play for Reynolds in 2004, when a friend was helping design a memorial to victims of the 1994 genocide in Rwanda. She invited Reynolds to help.
He flew into the capital, Kigali, in March 2007, and drove seven hours over horrendous dirt roads to the village that held the memorial. The country he traversed was raw and broken. Thirteen years had passed since the wave of murder that had killed perhaps 800,000 people in 100 days, yet Rwanda was still seething with grief and distrust.
The infant mortality rate was one of the highest on Earth. Life expectancy was less than 60 years. The typical Rwandan had an income of $206 per year.
As Reynolds visited villagers, he was struck by the impossibility of their daily existence. Clean drinking water was nonexistent. So were electricity and toilets. People spent hours fetching water and looking for wood.
After three weeks in Rwanda, he returned to Boulder and tore into books and academic reports on cooking practices and stove technology.
He settled on a Dutch-made stove that reduces wood down to clean-burning gases. Using pellets reduced the need for wood by 90 percent, compared with charcoal. But those stoves cost more than $75.
Then came the epiphany: Inyenyeri could supply the stoves for free while collecting revenue from subscriptions for pellets. Rwanda was urbanizing rapidly, and city dwellers rely on charcoal. They would be eager to switch to pellets, which were 30 to 50 percent cheaper.
“If you sell fuel every day rather than selling a stove every two years,” Reynolds said, “that’s a business.”
Customers in rural areas could not afford to buy pellets, but Inyenyeri could serve them with a barter system. People could gather sticks, although less than they needed for cooking, and exchange them for pellets. Inyenyeri would use the sticks to make more pellets.
In this way, Inyenyeri would effectively become a utility providing clean cooking fuel. It would construct a network of factories to produce pellets. The bigger the business grew, the cheaper the cost of making them.
That development was getting a push from African governments intent on reducing the use of charcoal. Across the continent, charcoal is a $40 billion-a-year industry, one dominated by criminal gangs that pilfer public forests and employ child labor. Rwanda’s government has vowed to phase out its use.
Inyenyeri would start in Rwanda, where the government has gained credibility with international aid organizations for its success in reducing poverty. It could use success there as a springboard for expansion across Africa.
Today, Inyenyeri has distribution offices in cities and villages in Rwanda. It runs a small-scale pellet plant in Gisenyi and is developing a bigger factory.
But one crucial element is still missing — scale.
In every company projection, a steep increase in customer numbers is required for the business to become profitable. Inyenyeri needs to persuade investors to deliver the cash to buy hundreds of thousands of stoves and erect new pellet plants.
But Reynolds nurses fears. Once Inyenyeri demonstrates the potential in the clean cooking fuel industry, he says, greedy competitors are likely to emerge. They could pick off the wealthiest urban customers while abandoning the rural poor.
But if the virtues of the business model have yet to be demonstrated, the demand for Inyenyeri’s product appears overwhelming. Everywhere the company expands, word of mouth swiftly exhausts the supply of stoves.
“This business model will happen,” Reynolds said. “If it’s not Inyenyeri that’s the first mover, then it will be someone else who learns from our mistakes and does it better. It’s too big of an opportunity.”